Air France Board Calls for End to Strike as Low-Cost Plans Drift

The Air France-KLM Group board backed Chief Executive Officer Alexandre de Juniac’s plan to cut short-haul costs through the expansion of its discount unit and called on pilots to end their longest strike in 40 years.

A single contract covering flight crew at Air France and the Transavia France discount division “opposes the principles” of the low-cost model, the board said Friday in a statement after directors met to discuss the crisis Thursday.

Pilots have resumed talks after Air France dropped plans for a new Transavia Europe operation bypassing the division’s French and Dutch arms, where De Juniac has struggled to impose a lower cost base after taking over as CEO about a year ago.

While expanding Transavia France could create more than 1,000 new posts, the business “can only develop under economic conditions that are compatible with the low-cost model,” the board said, calling on pilots to “conclude the negotiations.”

The Transavia project aims to slash European expenses and stem the advance of EasyJet Plc and other discount carriers that have captured a major chunk of the short-haul market. Pilots began striking Sept. 15 and voted to extend the walkout until Sept. 30 in a clash that’s costing Air France 20 million euros ($25 million) a day and throwing profit goals into disarray.

The strike is already the longest since one in 1971 which lasted 26 days and involved Air France, Air Inter and UTA.

The latest walkout was called by the SNPL and SPAF unions which represent pilots they say feel threatened by the growth of Transavia and what that might mean for mainline short-haul operations away from Air France’s Charles de Gaulle hub.

De Juniac raised the stakes in the run up to the strike by proposing the Transavia Europe plan to take the project beyond the French and Dutch Transavia units.

As losses from the action mounted he this week initially proposed delaying the move, a proposal pilots rejected as a “smokescreen,” only to back down and offer to scrap the new operation altogether amid pressure from the French government, which still holds a 16 percent stake in the group.

The Air France-KLM Group board backed Chief Executive Officer Alexandre de Juniac's plan to cut short-haul costs through the expansion of its discount unit and called on pilots to end their longest strike in 40 years.